Cryptocurrency Bitcoin hit a two-month low on Friday, dropping out of its recent tight range as global markets felt the effects of risk averse sentiment. On Thursday, the top crypto fell 7.2% in its biggest one-day drop since November 2022 when FTX exchange collapsed and in Asian trading hours on Friday, it slipped to a two-month low of $26,172. By 0835 GMT, it had partly recovered to $26,441, down 0.8% on the day.
Wall Street’s main indexes had closed lower on Thursday and Asian shares were heading for a third week of losses over concerns about China’s economy and fears that US interest rates would stay higher for longer due to a resilient economy.
The second biggest cryptocurrency, Ether, was steady at $1,685.20, having also dropped sharply on Thursday. The sell-off was attributed to a Wall Street Journal report that Elon Musk’s SpaceX sold its bitcoin holdings after writing the value down by $373 million. Musk is influential among crypto enthusiasts, and bitcoin prices have previously moved in response to his tweets.
Ben Laidler, global markets strategist at eToro, said the SpaceX report was the “immediate catalyst” for bitcoin’s sell-off, adding that the “broader driver” was that crypto assets were not immune to the deepening risk-off selling pressure seen across all asset classes.
Joseph Edwards, head of research at Enigma Securities, attributed the bitcoin price move to low volatility and a lack of enthusiasm from retail investors. Bitcoin had been hovering close to $30,000 in recent months, having gradually recovered this year after dropping sharply in 2022 when various crypto firms collapsed, leaving investors with large losses.
The markets had been boosted in June by BlackRock applying to launch a spot bitcoin exchange-traded fund (ETF) in the United States. Edwards said the concern now was that this could be a frontrun on the outcome of Grayscale’s lawsuit against the SEC; optimism on that front had been keeping markets inflated above what they might otherwise be for much of the summer.
Reporting by Elizabeth Howcroft; editing by Dhara Ranasinghe, Elaine Hardcastle. Our Standards: The Thomson Reuters Trust Principles.
